Former LuLaRoe vendors have accused the clothing multilevel marketing company of operating a pyramid scheme, resulting in more than 50 lawsuits and a $4.75M settlement.

Watch an insider break down how multilevel marketing companies operate—from recruitment to retention.

Multilevel marketing companies are direct sales companies with a pyramid-shaped hierarchy resulting from recruitment, but they aren't legally considered pyramid schemes because revenue is driven by product sales rather than recruitment fees.

Vemma reached a $238M settlement with the Federal Trade Commission over its pyramid scheme-style recruitment tactics that targeted college boys to sell energy drinks in the early 2010s.

Sophia Amoruso's company Nasty Gal was worth $100M at its peak

In 2006, Sophia Amoruso started an eBay shop that would later transform into the clothing company Nasty Gal. However, Amoruso’s rags-to-riches success with Nasty Gal didn’t last. After multiple rounds of layoffs and employee complaints, the company filed for bankruptcy in 2016.

Opioid epidemic 101: lawsuits and settlements

State and local governments trying to address the opioid epidemic have sued organizations they believe started and supported the crisis. Companies that made, distributed, or contributed to sales of the highly addictive painkillers are expected to pay more than $50B in settlements. These settlements specifically state that at least 85% of settlement funds must be spent on addressing the epidemic, though where exactly the money is going is unclear.

Red Lobster lost $11M on endless shrimp promotions—but its real estate holdings were what dragged it to bankruptcy

Golden Gate Capital, a PE firm, bought Red Lobster in 2014 for $2.1B. Golden Gate then sold Red Lobster's real estate, more than 500 storefronts, which generated $1.5B in revenue and helped finance the PE firm's acquisition of the company. Analysts say increased debt, high rent costs, and low equity put Red Lobster in an impossible position, leading to its 2024 bankruptcy filing—although the shrimp bill probably didn't help.

In the 1870s, a woman from Boston ran a Ponzi scheme disguised as a bank by women, for women that promised 8% interest.

Listen to an account of an 'airplane game' leader, a notorious, widespread illegal pyramid scheme that swept across the US in the 1980s.

Rent the Runway recently lost over 90% of its value

The COVID-19 pandemic and increased competition post-2020 are just two factors plaguing the designer clothing rental company.

The 2024 Synapse collapse took $90M of people’s life savings with it

In 2024, a banking middleman called Synapse declared bankruptcy. Unfortunately, it also locked roughly 100,000 Americans out of their own money, which prompted a class action lawsuit.

Founded in 1959 by Jay Van Andel and Richard DeVos, Amway, a home goods company, is the largest multilevel marketing company in the world by revenue, generating more than $7B annually.

Claire's has filed for bankruptcy multiple times

Between competition from online retailers such as Shein and Temu, and too many physical stores for today's retail climate, Claire's has had a difficult time modernizing.

The woman who coined the term ‘girlboss’ now has a VC firm called Trust Fund

In 2006, Amoruso founded the clothing company Nasty Gal, then later wrote a memoir called “#Girlboss” about her company’s meteoric rise. Later, she launched other ventures, including her “Business Class” business coaching series and the venture capital fund “Trust Fund.”

Meet a payday lender who tried to fight the industry

Phil Locke once ran more than 40 payday lending stores in Michigan before walking away from lending in 2012. Locke left because he said he felt guilty about being a predatory lender. He tried to become a consumer protection advocate and influence reform, but ended up returning to the industry. (Some users may experience an email wall.)

Inside the Sarah Lawrence College sex cult scandal

In late 2010, a middle-aged man, freshly released from prison, moved into his daughter's college dorm and created a group that had all the hallmarks of a cult. Over the decade that followed, he extorted millions of dollars from vulnerable young adults through violence, psychological torture, and forced sex work. Authorities credited his arrest to a magazine article published in 2019 detailing victims' allegations.

Many of the 2010s girlboss-era founders experienced a public fall from grace in 2020

In the 2010s, dozens of female founders were celebrated on the covers of business magazines like Inc. for their recent startup success, from Emily Weiss’s Glossier makeup brand to Steph Korey’s Away luggage company. But many of these companies were also the subject of large takedown articles around the year 2020.

How one supplement company cost a short seller $1B

Pershing Square, a hedge fund founded and run by Bill Ackman, put short positions on Herbalife in 2012, because it believed the company was a pyramid scheme. Ackman's longtime rival and legendary investor Carl Icahn began buying Herbalife shares, causing the stock price to rise—ultimately hurting Pershing Square's short position.

Temu was losing an average of $30 per order as of 2024

Some business experts have made the argument that Temu is more focused on rapidly gaining market share and growing its customer base than achieving profitability.

Sophia Amoruso coined the term 'girlboss' with her bestselling memoir

Sophia Amoruso turned a small eBay shop into Nasty Gal, a $250M fashion empire. Her success sparked the #Girlboss movement after her bestselling memoir, but behind the rise was a rapid fall. Leadership struggles and financial missteps led to bankruptcy in 2016.

After the owner fell into a Ponzi scheme, one braiding shop in suburban Maryland began making $130K a day by staying open for 24-hours

Because braiding often takes a long time, the salon prioritizes fast, efficient styles, with two braiders often working together on a client, which increases revenue by increasing turnover. The salon has 120 seats and more than 400 contracted braiders across its 10,000-square-foot space.

In 2025, Weight Watchers filed for Chapter 11 bankruptcy after reporting revenue and profit losses for multiple consecutive years, with its stock price losing about 99% of its value between 2018 and 2025.

A private equity firm led the leveraged buyout of Toys 'R' Us before the company's bankruptcy

After being acquired by two private equity firms and a real estate company for more than $6B in 2005, Toys 'R' Us filed for bankruptcy in 2017. Many point to the $400M a year the company had to pay to service its debt, as well as increased competition from online retailers like Amazon, for draining its profits and ultimately dragging it under.

A couple was once sent to prison for running a $31.8M extreme couponing fraud scheme

Investigators found fake coupons in “every crevice” of husband and wife duo Pacifico Talens Jr. and Lori Ann Talens’ home. The couple was sent to prison and are serving a combined 19 years.

The scam factories behind prolific scamming

Scammers are on the rise, and many of those behind them are trapped in so-called scam factories—shadowy organizations tricking honest workers into fraudulent employment.

Tiffany & Co. was among LVMH's most expensive—and complex—acquisitions

Three years after LVMH acquired Tiffany in 2021 for $15.8B, the jeweler's profits doubled to over $1B per year.

Temu was ordered to pay a $2M fine for alleged FTC violations

Specifically, Temu allegedly violated the INFORM Consumers Act of 2023 by failing to provide its customers with information and tools to help them avoid and report stolen, counterfeit, or unsafe goods.

Famous scammer Anna Delvey lied about having a $67M trust fund

Delvey conned New York City’s elite with her lies, saying that she was a German heiress and defrauding the city’s banks, restaurants, and more out of more than $275K in just 10 months. Her story was even turned into a Netflix series while she was in prison.

Facebook was sued for $150 billion over the violence against Rohingya refugees

Facebook has been criticized for years for a prevalence of disinformation and hate speech, a problem that's not just confined to digital content. The plaintiffs argue Facebook's algorithm amplified dangerous propaganda in Myanmar, contributing to violence.

After an estimated $8B in customer funds were lost through a cryptocurrency scheme likened to a Ponzi scheme, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison.

The US-led global debt settlement market is expected to expand from $4.8B in 2024 to $7.2B by 2032

While debt settlement companies aren't technically allowed to charge fees until after lowering a consumer's debt, a loophole in the Telemarketing Sales Rule (a mix of federal and state laws) gives predatory firms the opportunity to exploit consumers.

Payday lenders spent more than $5M on lobbying efforts in 2025

Payday lenders largely oppose rate cap policies, increased borrower risk-assessment requirements, and other regulations that would effectively shutter their industry. In 2025, the payday lending industry lobbied against interest rate limits on payday loan apps.

Despite the Supreme Court ruling that President Donald Trump's 2025 tariffs were unconstitutional, billions of dollars in refunds remain unresolved

Over 2,000 lawsuits seeking refunds have been filed by major companies, including FedEx and Costco, but CBP says its systems can't handle the volume. Interest on unpaid refunds is accruing at an estimated $650M per month.

Read about the National Labor Relations Board case against Bridgewater Associates

In 2016, The New York Times reported about sexual harassment claims at the hedge fund, which uncovered a large-scale case from the National Labor Relations Board over Bridgewater's employees' contracts. The NLRB challenged their intense confidentiality agreements, but the settlement was ironically deemed confidential.

Girl Scout cookies are so successful because buying them feels like giving to charity

The program generates $800M a year not because the cookies are exceptional, but because the salesforce makes refusal feel like a moral failure.

A star investment banker was fired, launching a decade-long court fight

Star bankers are the core of an investment banking firm's business, so when Perella Weinberg let their restructuring guru Mike Kramer go in 2015, he sued, launching a ten-year legal fight.

Every year, nearly 500,000 bankruptcies are filed in the US

From personal hardships to major corporate collapses like Enron and Bed Bath & Beyond, filing for bankruptcy isn't a quick fix or a “get-out-of-jail-free” card—it’s a complex, structured process offering debt relief or repayment options.

Before being sued over a customer's third-degree burns, McDonald's required all coffee to be served between 180 and 190 degrees Fahrenheit.

One of LVMH's key business innovations was widening the luxury market's target audience

While certain items under the LVMH umbrella can cost thousands of dollars, like large Louis Vuitton bags, others, like coin purses or lipstick, cost significantly less. Some argue that these comparatively lower-priced items allows LVMH's target audience to be much larger in size than it would have been if it only targeted the world's wealthiest shoppers, whereas others argue that it makes the brand more vulnerable to economic downturns.